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How to Give a Raise

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Photo: ©iStockphoto/DNY59

Howard Scott |

PEMBROKE, Mass. — Raises are not exactly a hot topic these days, particularly in the dry cleaning industry. But here is a story of something that happened to a young person I know, and it’s worth reading.

This person—we’ll call her Liz—had been working at a dry cleaner for a year when she asked for a raise. She wasn’t the usual type of worker. She was a college graduate who had taken a lowly job at a two-plant, four-store chain in the hopes that she would move up the ladder. The owner, a sharp businessman, realized her worth and didn’t want to lose her. He sensed that she could grow to become one of his top managers. On the other hand, business was down. There were no raises.

The owner called Liz into his office and closed the door. “Liz, these are hard times. My business is down 10%. I’m hard up against all my costs. Things will improve, but not tomorrow or the next day. On the other hand, you’re a good worker. So I’m giving you a 50-cents-an-hour raise because you’ve asked for one and because you’re been a loyal employee. And, finally, I don’t want to lose you.

“The 50 cents an hour translates to only $20 a week. That’s not much of an increase, I know. And you’re still underpaid for your education level and even for your contribution. But I hope this will keep you here until things improve. I want you to know that I think you are invaluable. Thanks for your contribution.”

Invaluable. Just a word. But it can mean so much more than the sum of the letters. The dictionary defines invaluable as “priceless.” That means can’t do without, necessary for the machine to keep functioning. As in someone whose worth is so great that no amount can be placed on it. The receiver of the compliment feels that she is an important part of the business. It’s a higher level of value.

I applaud the dry cleaner on several levels. First, using the word “invaluable” is a compliment that means something. It’s is so much better than “great” or “super” or “dependable” or “reliable” or even “important.” The raise-seeker takes home the impression that she is necessary for the company to keep running. Of course, the truth of the matter is that everyone—even the boss—is replaceable. So many CEOs who thought that they were the company were surprised when the firm continued just fine when they were replaced. Still, using the word “invaluable” is high compliment.

Second, explaining that business is down and that this is not a particularly great time for giving raises is an explanation that the raise-seeker understands. Everyone knows that when business is down, there is no extra money. So when an owner brings the employee into his confidence and actually names the decline—10%—that counts for something. That shows that the owner is willing to be open and honest about his situation.

Third, I applaud the owner for giving the employee a modest raise even though he can’t afford it. She has been there a year and is a person who might eventually be a key member of the team. The fact that she’s a college graduate willing to work in the low-prestige field of dry cleaning means that she can sublimate her ego. On the other hand, she has a steady job, and that is one reason she is working for the dry cleaner. But at any rate, you want her to feel better about her work—namely that there is the possibility of advancement.

Finally, the 50 cents an hour was about right. Fifty cents an hour translates to $20 more a week or $1,040 a year, small enough for the company to swallow yet large enough to be somewhat significant. The raise-seeker thinks, “A $1,000 raise. That’s something. It will pay for two months rent. It will pay for a few auto repair bills. It might enable me to start saving money.”

Of course, a $2-an-hour raise would be more hopeful, positive and complimentary. That would mean $80 more a week, $4,200 a year. That’s a terrific raise. But it is not going to happen in the dry cleaning industry, at least not in this economy. It would put too much strain on the business’ payroll structure. In truth, the raise-seeker wouldn’t expect such a raise.

On the other end of the scale, giving a token 10 or 20 cents more an hour is insulting and means nothing. You are saying that the raise is just a gesture, and that there will probably never be a chance to improve one’s situation. No one is happy.

On the other hand, no raise would send a negative signal. It would say, “You have a job, you continue to do your job, and you are adequately paid. It also says that you should not expect to receive a raise, not until business gets healthier.

Saying “you’re invaluable but we can’t afford to give you a raise” wouldn’t work, because it shows the owner is good at using words, but not at demonstrating that he means what he says. The raise-seeker would probably immediately begin to hunt for a new job.

Possibly, along with the raise, you might assign a new task to the raise-seeker: “I’m giving you this raise at a time when I’m not giving raises to other employees, so I want something in return. I want you to do the daily cash-register reconciliation.

“We do it a half-hour before the shift ends, and it will not make you stay late. It is something the store manager usually does, but you can help her out. Plus, it will help you get familiar with the front operation, which is all about our revenue flow. It’s good to understand what’s going on up-front when you assume a higher management position. Are you OK with that?”

Her acceptance of this new responsibility is a signal that your decision was a correct one.

This is only one tale of a raise. When you are in the position of giving raises, consider the implications of your decision.

About the author

Howard Scott

H&R Block

Industry Writer, Drycleaning Consultant, and H&R Block Tax Preparer

Howard Scott is a longtime industry writer and drycleaning consultant, and an H&R Block tax preparer specializing in small businesses. He welcomes questions and comments, and can be reached by writing Howard Scott, Dancing Hill, Pembroke, MA 02359.

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